Shares in mining stocks jumped on Tuesday as the price of two key commodities for the global economy, copper and iron ore, gained on a range of positive news.

The major diversified miners listed on the UK market all produce copper and/or iron ore. Rio Tinto (RIO) was the biggest riser with a 4.1% gain to £63.11, while BHP (BHP) increased 3.6% to £22, Anglo American (AAL) rose 4% to £32.62 and Glencore (GLEN) moved 3.5% higher to 332.8p.

COPPER GAINS ON DOLLAR WEAKNESS

Copper, which is currently sitting around all-time highs, had experienced a bit of a pullback in recent weeks but rose 0.7% to $10,328 per tonne as the US dollar weakened to multi-month lows.

Copper is priced in dollars so the price rises when the dollar weakens, because it becomes cheaper and more appealing to holders of other currencies.

The metal is at all-time highs due to many supply and demand factors. On the supply side, the pandemic impacted production at several big mines while there is also a lack of new projects being built, something which is anticipated to put a further squeeze on supply going forward.

On the demand side, along with its use in general infrastructure copper is key for the transition to renewable energy as well as electric vehicles, with many commentators arguing that without copper there can be no decarbonization.

IRON ORE UP AS CHINA EASES EMISSON CONTROLS

Iron ore, which has also hit all-time highs, is another metal that has rebounded as reports emerged that China - by far the world’s biggest consumer of the raw material - is set to ease emission controls around steelmaking in Tangshan, the world’s largest steel-producing city. Iron ore is a key ingredient in steelmaking.

Having pulled back from all-time highs of $230 per tonne in recent weeks, the metal has risen sharply today with a 5.9% gain to $198.50 per tonne.

The likes of BHP and Rio Tinto, and to a lesser extent Anglo American, make a large part of their earnings from selling iron ore into the Chinese market.

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Issue Date: 01 Jun 2021